White House Refuses to Back Down on UAE Ports Deal; Jon Corzine Speaks Out on Port Deal; Violence In Iraq Sparks Fear Of Possible Civil War; U.S. Trying To Close Trade Gap With China

Aired February 22, 2006 - 18:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, February 22. Live in New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

Tonight, the White House refuses to back down on the United Arab Emirates ports deal despite blistering bipartisan criticism, rising public concern about threats to our national security. We'll be going live to the White House and to Capitol Hill for the very latest.

Also tonight, President Bush's family and friends, it turns out, have close business connections to the United Arab Emirates. Are those connections influencing any way government policy on the ports deal?

We'll have a special report.

Governor Jon Corzine of New Jersey says his attorney general will file a federal lawsuit to stop the Emirates from taking management control of terminal at six major U.S. ports. Governor Corzine is our guest here tonight.

And at least one member of the Bush administration, U.S. trade representative Rob Portman, recognizes the difficulties and problems of our trade relationship with Communist China. Rob Portman, Ambassador Portman, is our guest here as well.

All of that and more coming right up.

We begin tonight with what is a concerted attempt by the Bush White House to end the bipartisan uproar over the United Arab Emirates ports deal. The White House today refused to back down in any way in its stubborn defense of this deal, insisting again that the sale does not jeopardize national security. But members of Congress, governors and mayors, Republicans and Democrats alike, are opposed to the deal and they are demanding a full-scale review. They insist the sale of operations at six major U.S. ports is a major security risk because the United Arab Emirates has ties to the 9/11 hijackers and nuclear proliferation.

We have two reports, Dana Bash at the White House, Ed Henry on Capitol Hill.

We turn first to Dana Bash -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, I talked to several close allies of this White House today who are shaking their heads in disbelief that the president decided to throw down the gauntlet and pick a fight or at least engage in a fight with leaders of his own party over national security, the issue that united them really up until now. But top White House officials today admitted that the firestorm was caused in part by not doing exactly what they have done all day today and yesterday, which is basic communication and explanation.

(BEGIN VIDEO CLIP)

JOHN SNOW, TREASURY SECRETARY: Our failing here, the failing was in explaining this process and having this process understood by -- by -- by our critics.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Looking back in hindsight, we believe members of Congress should have been briefed on it sooner. But the president is confident in the process that has been put in place to review these matters. He's confident in those who are charged with looking at these issues and looking at the national security concerns in this.

(END VIDEO CLIP)

BASH: Now, top Republican lawmakers may have been in the dark about the details of this until -- until recently, but as we reported first on Monday, the president didn't know that the deal had been approved, the details of it, until it was already in the public, until he saw that lawmakers were upset about it. Now we understand CNN is told by a senior administration official that top White House officials also, Lou, did not know about it.

Why? Essentially, because they weren't given a heads up by the political appointees in this 14-agency panel.

Their focus, even some officials admitted today, was on national security, not on politics. The White House has been saying that that is a good thing, but privately, they do admit that having a heads up would have made it easier for them to grease the skids, if you will, and try to at least explain in a way they're doing now to members of Congress. They do think that this is a good plan, but it's not just communication, Lou. Some Republicans who were briefed also don't think that this is a good idea.

DOBBS: Don't think it's a good idea. The Senate majority leader, Senator Bill Frist, the speaker of the House of Representatives, Dennis Hastert, they outright oppose this deal.

BASH: Well, in talking to -- Ed Henry could speak to this probably better than I, but in talking to some of their staff, I think they try to make clear that what they are very worried about is they're not sure about their review process. They didn't have the information about whether or not national security really is going to be jeopardized or not because they were informed. DOBBS: Dana, I assure you that irrespective of what the White House staff says, everyone in that staff has great confidence that the speaker of the House and the Senate majority leader understand what the committee on foreign investments in the United States does and how they go about it.

Dana, thank you very much.

Dana Bash.

Senior government officials will be going to Capitol Hill tomorrow to try to convince senators to support the UAE ports deal. Many senators are determined to force the Bush administration to take another look at this deal. But one frequent critic of the White House, Senator John McCain, says it's important to trust President Bush on this issue.

Ed Henry reports from Capitol Hill -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Lou, that's right. You know, the political and policy headaches for the White House have really been magnified by a double barrel problem which is, as you noted, you have the Senate majority leader, Bill Frist, as well as the speakers of the House, Dennis Hastert, both coming out against this port deal in very tough language, unexpectedly. And then on top of that, you've had few, if any, senior Republicans come out and defend the president or the port deal.

That's starting to change ever so slightly. As you noted, Senator John McCain, not always a Bush ally, last night delivered a speech in Arizona in which he said the nation should trust the commander in chief. He added that he thinks some of his lawmakers need to get all the facts before they pop off and criticize the deal. He did, though, stop short of endorsing the deal himself.

One of his senior colleagues, though, the Republican chairman of the Senate Armed Services Committee, who will be holding this special briefing that you mentioned tomorrow, John Warner, did today tell CNN that he's predisposed to support the deal.

He said also that he believes the commander in chief deserves some deference here. He's having this special briefing with six top Bush officials because he thinks if more information will get out, more people might support this deal.

Take a listen to Senator Warner.

(BEGIN VIDEO CLIP)

SEN. JOHN WARNER (R-VA), CHAIRMAN, ARMED SERVICES COMMITTEE: And I think the president and his subordinates followed the law, did a careful examination. And at this point in time, I do not see a basis to question it.

Could there have been better oversight by the Congress? Yes.

(END VIDEO CLIP)

HENRY: Now, Chairman Warner added he's very concerned that if this deal gets shot down, it could cause real problems in the Arab world, that it could be seen as disrespectful to the United Arab Emirates. He noted he had a one-hour briefing yesterday in the office of Defense Secretary Donald Rumsfeld, and Warner contends that the United Arab Emirates, despite objections by other lawmakers up here, is a critical ally in the war on terror, that in fact more U.S. ships are docked in the ports of the United Arab Emirates than any other nation in that region.

But I can tell you, other Republican lawmakers up here not buying that. And, in fact, saying they are more concerned about respecting the ports of the United States than respecting other nations around world. And they're saying it in very frank terms.

Today, a one-line letter from Republican Congresswoman Sue Myrick of North Carolina, normally a Bush ally. She came out and said, "In regards to selling American ports, the United Arab Emirates, not just NO, but HELL NO!"

The anger, Lou, is still palpable among Republicans up here.

DOBBS: It is -- as a number of people have pointed out, this is becoming a bipartisan uproar on Capitol Hill. The president seems to achieve something that many inferred was a campaign promise to be a uniter. This is a clear bipartisan, Democrat and Republican, coming together, expressing their concern on this deal.

HENRY: We clearly -- you're right -- have not seen lawmakers in both parties normally at each other's throats come together, especially the leaders in both parties, to such an extent. And that's why this is a dangerous situation that's going on in terms of just the politics, putting aside the policy for a second, because the fact is, the president, as you know, has brandished that veto threat.

Based on the bipartisan concern up here, that veto could very well be overridden if what we're hearing next week when they come back from recess, they're very likely to pass legislation blocking this deal with overwhelming bipartisan majorities -- Lou.

DOBBS: By my count, then, assuming that Senator McCain would support this, that would leave 48 other senators who have not expressed support in any way or outright opposition to this deal.

HENRY: Right. But I think that, clearly, there's only, so far, a couple of lawmakers who have either come out in support or even close to support. Again, Senator McCain stopped short of actually endorsing it. So, right, there are a lot of people who have not spoken up, but the vast majority who have spoken up have spoken out against the deal -- Lou.

DOBBS: But 98-2 is at least the tentative early count.

HENRY: That would be able to override a veto. You're right.

DOBBS: Thank you very much.

Ed Henry.

The political battle over this port deal has exposed sharp divisions between the White House and the Republican leadership in Congress. This battle has also led to an unlikely alliance between opponents of the deal on both sides of the aisle. The question tonight is whether this showdown will affect the outcome of the midterm elections some nine months away.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): When President Bush threatened to veto legislation to stop an Arab company from taking over port operation in the United States, the universal response was "What is he thinking?"

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: That would send a terrible signal to friends and allies, not to let this transaction go through.

SCHNEIDER: The president was sending a signal to his international allies, the U.S. will stand by its commitments. But the domestic political signal sounded tone deaf. It sounded like business interests were trumping security interests.

Surprising, because the Bush administration successfully played the national security trump card in 2002 and 2004. Now, it's the only card they have left. And they've signaled their intention of playing it again in 2006.

KARL ROVE, DEPUTY WHITE HOUSE CHIEF OF STAFF: Republicans have a post-9/11 view of the world. And Democrats have a pre-9/11 view of the world.

SCHNEIDER: Democrats suddenly see an opening. "The administration's credibility on national security is not the ace that they thought it was," the chairman of the Democrats Congressional Campaign Committee said, especially with growing security concerns about China and U.S. borders and Iran and a deteriorating situation in Iraq.

Republicans in Congress see political trouble ahead. They don't need a poll to gauge public sentiment on the port security issue. Just ask any member of Congress.

Democrat...

SEN. CHARLES SCHUMER (D), NEW YORK: No one can understand it.

SCHNEIDER: Or Republican...

REP. PETE KING (R), NEW YORK: I've never seen an issue that's galvanized so many people. SCHNEIDER: So a lot of Republicans are refusing to go along with President Bush on the ports deal.

REP. CURT WELDON (R), HOMELAND SECURITY COMMITTEE: It almost smacks of an arrogance, like it doesn't matter what the Congress says. We're going to do what we think.

SCHNEIDER: On this issue, Republicans can score political points by defying an unpopular policy and an unpopular president.

WELDON: Well, this time, the Congress is saying, oh, no, you won't.

(END VIDEOTAPE)

SCHNEIDER: If President Bush won't play the security card, congressional Republicans will to keep the Democrats from playing it against them this fall -- Lou.

DOBBS: Bill, Dana Bash tonight reporting that members of the president's staff at the White House are surprised, if not outright shocked, that he would take such a strong stance, threatening a veto on this issue.

SCHNEIDER: They're surprised about the president you mean?

DOBBS: Yes.

SCHNEIDER: OK. Well, it is surprising to everyone, because it doesn't make a lot of political sense.

If they were to pass legislation to stop this deal and he were to veto it, I think the political ramifications would be enormous. And it would get Republicans very worried.

DOBBS: Right. And this White House is sending, I think, at best, a peculiar message, and that is, standing with that banner of the war on terror, the terrorism card that Karl Rove, as you reported, announced that they will be driving in this midterm election campaign year, saying that if you don't go along with what you consider to be a breach of security and the national interest, you will be not helping us in the war on terror. That gets to be convoluted by any standard.

SCHNEIDER: It is a very convoluted message. I was kind of interested in the report on John McCain, who is one of the few, as you indicated, one of the few who is not criticizing President Bush. Well, it's interesting, because, you know, there's an old political saying, Lou, your base are the people who are with you when you're wrong.

Well, if Bush is wrong, and most people in the country and most politicians say he's dead wrong, McCain is saying, I'm not going to criticize him. Well, that could be a play to score some points with Bush supporters, and he's going to need them if he runs for the Republican nomination.

DOBBS: Good point. And we thank you.

Bill Schneider.

SCHNEIDER: Sure.

DOBBS: The White House today said lawmakers who are critical of this ports deal are being influenced by what they said are misrepresentations by media reports.

(BEGIN VIDEO CLIP)

MCCLELLAN: Now, we have seen some concerns expressed by some members of Congress and others, and that's understandable given that they have seen some coverage that has seemed to suggest that this company, an Arab company, would be in control of our ports. And that is a false impression. That's why it's important that we continue to talk with members and others about the facts.

(END VIDEO CLIP)

DOBBS: McClellan went on to say that the Committee on Foreign Investments examined 65 deals a year on average, but as we reported here last night, and we would like to remind Mr. McClellan, that the committee has turned down only one deal out of 1,500 deals that it has reviewed.

President Bush has put forth a challenge tonight that I simply can't ignore. The president yesterday said he wanted those who are critical and questioning of this port deal to "step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a Great British company."

Well, first of all, Mr. President, to equate any country to your principal partner in the coalition ignores that special relationship this country's enjoyed with the United Kingdom for decades and decades. This also is not just a British company and an Arab company, as I think you well know.

Peninsula and Oriental Steam Navigation is a British privately owned company. Dubai Ports World is a UAE government controlled and owned company. You see the difference, of course.

And furthermore, the money used to fund the 9/11 attacks, most of it, in fact, was sent to the hijackers through the UAE banking system. In fact, two of the hijackers were originally from the UAE.

The UAE stonewalled U.S. efforts to track al Qaeda bank accounts after 9/11. In addition, the Emirates does not recognize Israel as a sovereign state. And the UAE was a transfer point for shipments of nuclear technology to Iran, North Korea and Libya.

And if those aren't good enough reasons, I would just suggest I'm at a complete loss to offer what might be considered good reasons.

Still ahead here, do you wonder why President Bush is insisting on pushing this port deal through? Well, we do, too, and we've taken a look into it. We'll have a special report -- a special report on what appears to be the Bush administration's special relationship with Dubai.

And Dubai's friends in high places on K Street. K Street lobbyists don't see anything wrong with helping push this $7 billion port deal through, even if it raises serious questions about national security.

And can the Bush administration be counted on to issue an objective report on its Hurricane Katrina response? A special report ahead on the new White House Katrina report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush's family and members of the Bush administration have long-standing business connections with the United Arab Emirates, and those connections are raising new concerns and questions tonight in some quarters about why the president is defying his very own party leadership and his party in defending the Dubai port deal.

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): The oil-rich United Arab Emirates is a major investor in The Carlyle Group, the private equity investment firm where President Bush's father once served as senior adviser and is a who's who of former high-level government officials. Just last year, Dubai International Capital, a government-backed buyout firm, invested in an $8 billion Carlyle fund.

Another family connection, the president's brother, Neil Bush, has reportedly received funding for his educational software company from the UAE investors. A call to his company was not returned.

Then there is the cabinet connection. Treasury Secretary John Snow was chairman of railroad company CSX/. After he left the company for the White House, CSX sold its international port operations to Dubai Ports World for more than a billion dollars.

In Connecticut today, Snow told reporters he had no knowledge of that CSX sale. "I learned of this transaction probably the same way members of the Senate did, by reading about it in the newspapers."

Another administration connection, President Bush chose a Dubai Ports World executive to head the U.S. Maritime Administration. David Sanborn, the former director of Dubai Ports' European and Latin American operations, he was tapped just last month to lead the agency that oversees U.S. port operations.

(END VIDEOTAPE)

ROMANS: Now, some members of Congress, some of whom have already confirmed Sanborn, say they'd like to take a closer look at this nomination. But it's not just administration connections that Dubai has in this deal, Lou. It's now aggressively lining up representation on the Hill, bipartisan representation.

DOBBS: Lobbyists as representation, including Bob Dole. It's a remarkable effort. It's a -- it can be a tremulous feeling to stand between $7 billion and those who want to exchange that money irrespective of the consequences.

Thank you very much.

Christine Romans.

The United Arab Emirates not only has friends in high places in government, it also has high-powered lobbying connections. This oil- rich nation has been lavishing hundreds of thousands of dollars on K Street, lobbying friends to push its point of view and its goals. One of those friends we found out today is none other than Senator Dole, former Senator Dole.

Lisa Sylvester has the story.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice over): To deflate criticism, Dubai Ports World has gone on a hiring spree. The bipartisan lobbying firm headed by former congressman Tom Downey and Ray McGrath was hired last week.

Senator Bob Dole and the lobbying firm he works for, Alston & Bird, also got a call. DPW, owned by a member of the United Arab Emirates, is pushing hard to keep Congress from blocking the deal.

TED BILKEY, COO, DUBAI PORTS WORLD: We're going to do anything possible to be sure that this deal goes through.

SYLVESTER: And they're tapping former lawmakers to do their bidding.

ROBERTA BASKIN, CENTER FOR PUBLIC INTEGRITY: An ex-senator is a perfectly-placed lobbyist because an ex-senator, of course, is going to have more gravitas. An ex-senator can actually go onto the Senate floor.

SYLVESTER: But lobbying Congress is not new for the United Arab Emirates. The country has a team of U.S. lobbyists representing its interests.

Records filed with the Department of Justices Foreign Registration Office show the UAE paid at least four lobbying firms more than $720,000 last year. According to Senate disclosure records, the Dubai Chamber of Commerce spent at least $100,000 lobbying Capitol Hill in the first half of last year.

But the heavy lobbying efforts could backfire. It's now drawing attention to the influence of foreign governments on U.S. policy. Senator John Kerry has written Treasury Secretary Snow asking for full disclosure of the lobbying efforts on behalf of DPW. Congressman Curt Weldon echoed the need to know more about how this deal was sealed.

REP. CURT WELDON (R), PENNSYLVANIA: We're talking about a corporation that is majority interest owned by another government. That's unlike the British or other companies that come in and invest in America. You're talking about a company that largely has a government control its operations.

(END VIDEOTAPE)

SYLVESTER: One problem with foreign lobbying is the lack of transparency. Lobbyists representing foreign governments have to register with the Department of Justice, but the records are not easily obtained and the information included on those disclosure forms are usually very vague with government entities revealing as little as possible -- Lou.

In our poll question tonight, we ask: Do you feel more or less confident because President Bush says he didn't know about the port deal until members of Congress objected after the deal was approved?

Cast your vote at loudobbs.com. We'll have results later here in the broadcast.

The Bush administration has stated repeatedly that the United Arab Emirates is a reliable partner in the war on radical Islamist terrorists. But if the UAE is such a stable, dependable friend of the United States, then why is the United States State Department warning Americans on the dangers of traveling to the United Arab Emirates?

The State Department says in its current travel advisory, "Americans in the United Arab Emirates should exercise a high level of security awareness. Americans should maintain a low profile and vary routes and times for all required travel."

That's right, our State Department issuing a travel advisory for the United Arab Emirates, the owner of DP World that would take over operation of terminals at six major U.S. ports.

The United States, of course, is not the only government concerned about its citizens' welfare in the United Arab Emirates. Britain advises its citizens to "avoid large gatherings" and "be aware of the threat of terrorism."

The Australian government says, "We continue to receive reports that terrorists are planning attacks against Western interests in the Unite Arab Emirates."

Canada is currently advising its citizens on the threat of terrorist attacks in the UAE as well.

Still ahead, our nation's ports security sell-off. Foreign firms, foreign governments think U.S. ports are a great investment, and the Bush administration is doing absolutely nothing to stand in the way of their enthusiasm.

We'll have a special report.

And New Jersey's governor, Jon Corzine, will be my guest here. He does not want the Emirates running the port of Newark and he is instructing his attorney general to settle the matter in court.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: It's been argued by some this week, including the president of the United States, that there should be no difference between a British company operating terminals at our ports and a United Arab Emirates company operating terminals at our ports. In point of fact, this administration has forgotten on occasion, at least, to point out that the United Arab Emirates government owns this firm.

But in other ports around the country not influenced by this deal, many, many of those terminal facilities are already under the control of foreign companies. It's nothing less than what has been a massive, massive sale of our assets to foreign corporations.

Kitty Pilgrim brings us up to date.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice over): A U.S. port, sometimes in name only. Foreign-based firms control at least a third of the port terminals in the United States, usually long-term leases that run for decades. Eight of the top 10 high-risk cities named by the Department of Homeland Security are port cities.

JANICE KEPHART, FMR. 9/11 COMMISSION COUNSEL: When you have a foreign operator, what it should be meaning to the government is that you have increased background checks and you're more concerned about what might be coming into those terminals because they're coming from foreign entities.

PILGRIM: In New York-New Jersey ports, Danish, Hong Kong and British companies run many of the operations. Long Beach, California, has China Ocean Shipping Company, the national flag carrier of the People's Republic of China. Six years ago, the company wanted to move to a former Navy base in California. Public outcry killed that deal, but the company is still in California, and even bigger presence because of the Asian import boom. L.A. ports house Denmark-based Maersk and APL, a company 68 percent majority owned by the Singapore government, also Taiwan's Evergreen. Long Beach leases to South Korea Hanjin, Japan's international transportation service, Hong Kong's Long Beach Container. Seattle is 50 percent operated by foreign companies, South Korea Hanjin and Singapore government-controlled APL.

JAMES P. HOFFA, PRESIDENT, INTERNATIONAL BROTHERHOOD OF TEAMSTERS: Turn it around. Do you think the Chinese or that the Arabs would let us buy key ports in their country? And the answer is no. Let's make sure that we know what we're doing. Security is the key. We have a war on terrorism. And the most vulnerable part of America right now is our ports and we've got to make sure that they are secure.

(END VIDEOTAPE)

PILGRIM: Now all of the top 10 container ship fleets that come into ports are foreign based. Panama has the largest ship registry in the world, Liberia the second largest, flags more than 2,000 ships and they carry about 10 percent of the world's cargo, Lou.

DOBBS: And what about the U.S. of A.?

PILGRIM: Well, we're rather unrepresented in this area. We have some companies, but not as many as foreign.

DOBBS: Perhaps I should talk with the U.S. trade representative about how that came to be. Kitty Pilgrim, thank you very much.

We've received literally thousands and thousands of e-mails on this deal to give operational control of facilities at six major U.S. ports to the UAE-controlled firm. Here are just a few of your thoughts.

Lou in Illinois: "Lou, controlling our seaports must be another one of those jobs Americans won't do. That must be it."

Annette in New Jersey: "We've turned into a nation of mushrooms. The Bush administration keeps us in the dark and feeds us -- all day."

And Grant in Arizona: "Secretary Chertoff's assurance notwithstanding, why should we left foreign governments, even friendly ones, operate our ports? Is this just more of Bush's free trade train wreck gone amok? What next? Sell the U.S. customs offices to China?"

And Bobbi in Indiana: "It seems we had more homeland security before we had a Homeland Security Department."

And Jonah in Maryland: "Lou, why not just sell the seaports to al Qaeda?"

And R.R. Frog: "Would the United Arab Emirates allow a U.S. company to take over security for their ports? Would China allow it?"

And Carmalatta in Arkansas: "Lou, with the outsourcing of our jobs, the illegal alien problem and now the sale of our ports to a foreign government, it makes you wonder just what government Bush and his administration are really working for. It definitely does not look like it's for the United States and the American people."

And Dave in New Jersey: "A failing Social Security, Mexico and border security, Dubai and port security, Chertoff and Homeland Security. With all this security, why do I feel so insecure?"

And Jerry in Texas: "I must be dreaming. On CNN, I saw a graphic that showed a White House aide said 'Bush didn't know anything about the port deal until he started hearing the protests.'"

Unfortunately, Jerry, it is no dream.

And Ed in Nevada: "Lou, interesting that the UAE people want CNN to shut you up, not a word about your accurate assessment. You screwed up what was supposed to be another secret assault on Americans' right to be informed with both our government and foreign governments being involved in this type of action, just who the hell is our real enemy?"

And Dan in Florida: "President Bush promised to be a uniter, not a divider. Well. by selling our port operations to the UAE, he has finally united all Americans on at least one issue."

We'll have more of your thoughts coming up here in the broadcast. Send us your thoughts at loudobbs.com. Coming right up, I'll be joined by the governor of New Jersey, Jon Corzine, who says his state was left completely in the dark on the sale these port facilities. And Governor Corzine says he will not allow the port of Newark to fall under Dubai's control.

And U.S. trade representative Ron Portman is our guest tonight. We'll hear his thoughts on the Dubai port deal and the high cost of free trade and what he defines as a problem troubled relationship with China. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, New Jersey's Governor Jon Corzine is joining the fight against the Dubai port deal. Governor Corzine is filing two lawsuits to stop Dubai Ports World from taking over the port of Newark, one of six major U.S. ports involved in this deal. The governor says the port deal is a complete violation of his state's sovereignty and Governor Corzine is our guest here tonight. Governor, good to have you with us.

GOV. JON CORZINE (D), NEW JERSEY: Thanks for having me.

DOBBS: A violation of the sovereignty of the state of New Jersey?

CORZINE: I think it's a violation of all of the sovereignty of America, turning over a port to a country that has not shown the kind of history of protecting the transfer of nuclear weapons or at least the parts across its borders, a country that is one of three that supported the Taliban pre-9/11, that has really not shown consistency with regard to our foreign policies, as you pointed out, with respect to Israel. I think it's a dangerous place to be going, to turn over the operation of our ports.

DOBBS: And you've instructed your attorney general to file suit.

CORZINE: Absolutely. There's actually two suits. One, the attorney general we've asked to file suit on sovereignty, rights of the state. We're being asked to take on responsibilities that really are national responsibility, on national security, without having any information on knowing why that decision is being taken. We don't know why the decision was taken to allow the UAE to take ownership through a state-controlled company of this -- of our ports.

And the second suit is, we think, since the Port Authority of New York and New Jersey owns the property on which several elements of the port are located, that there's been a breach of contract on the transfer of ownership and so, we will go into court to break the lease so that those pieces of the port will not be able to be transferred at the time of the so-called merger.

DOBBS: When you talk about the state of New Jersey, your government being left in the dark by the Bush administration and the necessary agencies including Homeland Security, of course, this is also what we're told by the leadership of the Senate, the leadership of the House, by members of Congress.

CORZINE: Lou, you -- there are very few things that I have seen in my limited political life of six years that have been so overwhelmingly bipartisanly recognized as a problem that's outside of the realm of common sense of anyone, whether you're Republican, Democrat, whether you live in New Jersey, or whether you live in Ohio or Tennessee, for that matter.

DOBBS: The idea that we're also -- we're watching a very well funded P.R. campaign kick up. There's some obvious relationship also with the administration because the language is starting to sound a little similar.

There's also the charge of bigotry, Islamophobia, as some have put it. How do you respond to that?

CORZINE: Islamist jihadists have used the UAE, whether it's the policy, the country, which I don't think it is -- they have used that country in recent history in a way to threaten the United States. Two of the hijackers on 9/11 were from there. Money was passed through.

This is a situation where, as you pointed out, the State Department thinks it's a threat for American citizens to be there. And I think it is -- it's just outside of the realm of reason that we are going to, without complete disclosure to the American people and certainly to the people who are responsible for protecting folks in their hometowns and in their states without giving them the information to say why we believe this isn't a risk.

And it isn't the risk just of the port. It's actually the supply chain. These ships get loaded in Malaysia. They get loaded in Indonesia. They get loaded in Dubai, and who's hiring the people that are doing that work? Who's going to do the background checks on them? Are there -- is there the risk of Islamic jihadists getting into that work chain?

DOBBS: Well, the State Department says that there is concern about radical Islamist terrorists in the United Arab Emirates and has sent out an advisory to Americans traveling there. For the state of New Jersey, Governor Jon Corzine says this deal will not stand for his state.

CORZINE: We're going to work very, very hard from the angles that we have to push back and say no on this deal.

DOBBS: Governor Corzine, thank you.

CORZINE: Thank you.

DOBBS: A reminder now to vote on our poll. Do you feel more or less confident because President Bush says he didn't know about this port deal until members of Congress objected after the deal was approved? Cast your vote at loudobbs.com. We'll have results coming up here in just a few minutes.

Next, is Iraq on the brink of civil war? Insurgents destroy one of the most sacred Shia mosques in Iraq, and attack 20-some-odd others. We'll have a special report from Baghdad.

And I'll be joined by U.S. trade representative Rob Portman. He's taking on communist China and unfair trade practices. I'll be talking to him about that and the Dubai port deal. The ambassador is here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq, insurgents have killed two more of our troops in roadside bomb attacks. A U.S. marine was killed near Baghdad, a soldier killed in Ramadi west of Baghdad -- 2,278 of our troops have now been killed in Iraq since this war began three years ago.

There are new fears tonight that Iraq is on the brink of civil war. Terrorists today destroyed one of the most important Shia mosques in all of Iraq in the city of Samarra.

Afterward, Shia gunmen launched nearly 100 revenge attacks, killing at least 19 people. The U.S. ambassador in Baghdad said Iraq is at a critical moment. Aneesh Raman reports from Baghdad.

(BEGIN VIDEOTAPE)

ANEESH RAMAN, CNN CORRESPONDENT (voice-over): A dawn attack striking one of Shia Islam's most sacred shrines. Reduced to rubble, the iconic Askariya Mosque in Samarra now without the golden dome that for a century proclaimed its importance, destroyed after men dressed as Iraqi police commandos bound the guards on duty and once inside, detonated a series of bombs. The attack ignited immediate fury among Iraq's majority Shia community, pouring onto the streets in thousands. In Samarra, in the Kadamiya (ph) area of Baghdad, in neighboring Sadr City where Mehdi militia loyal to the Shia cleric Muqtada al-Sadr armed themselves threatening to descend on Samarra.

Iraq's highest Shia spiritual authority, the Grand Ayatollah Ali al-Sistani, who has not been seen in public in a year and a half, made a television appearance surrounded by senior Shia clerics urging in a separate statement peaceful protests in line with the words of Iraq's prime minister announcing a three-day period of mourning condemning the attack, calling for calm.

But that's been a hard sell to an enraged people. Reprisal attacks took place within hours.

(on camera): For nearly three years now, Iraq's Shia community has come under near daily attack by the Sunni-dominated insurgency and has all along stopped short of responding with large-scale violence of its own. The fear now, though, is that this latest attack may be a tipping point with Shia leaders saying their patience is wearing thin.

Aneesh Raman, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: At the United Nations tonight, U.S. Ambassador John Bolton is demanding that the United Nations take action to end corruption and abuse in U.N. peacekeeping operations. Ambassador Bolton insists the United Nations Security Council should deal with the issue.

But more than 130 mainly developing countries are opposing Ambassador Bolton's move. Critics of those countries say they are simply trying to hide corruption and to block any effort at all to reform an institution badly in need of reform: the United Nations.

The Bush administration tomorrow releases its response to a highly critical Congressional report on the Hurricane Katrina disaster. This White House report is expected to criticize the Homeland Security Department and its response to Katrina.

The report is expected to list 125 recommendations on improvement of its hurricane disaster response, but it is not expected to be as critical of the administration as would be the Congressional report.

Just ahead, a look at your thoughts, including your continued outrage over the administration's push for the Dubai port deal.

And I'll be joined by the U.S. trade representative, Rob Portman, who says our trade relationship with communist China lacks equity, durability and balance. I couldn't agree more. We'll see what else we agree on here next. Stay with us.

(COMMERCIAL BREAK) Tonight the Bush administration refusing to back down in its support of the Dubai ports deal. Joining me tonight with his thoughts on that deal and his commendable efforts to finally challenge communist China's trade violations with the United States is none other than U.S. Trade Representative Rob Portman. Ambassador, good to have you with us.

AMB. ROB PORTMAN, U.S. TRADE REPRESENTATIVE: Thanks for having me on.

DOBBS: Let's start with this equation that your colleague, Michael Chertoff the secretary of Homeland Security, seemed to suggest that there should be a balancing of interest here in terms of the war on terrorism and a robust global trading system. How do you respond?

PORTMAN: Well, a couple thoughts. I listened to some of your program earlier and I think it's important to get the facts out about what's really going on here. One is that there are U.S. companies involved in port operations. It's not a big business for us but I know in Mexico and Panama, we operate some ports and so there is a trade element here.

But second, and more important to me, Lou, is the fact we need to look at United Arab Emirates and Dubai a little bit differently than we do some other countries. They have been a good ally. They have been a solid anti-terrorism ally. That port, by the way, in Dubai is the second biggest port outside the United States ports for our U.S. Navy.

And if -- the Navy's taken well care of there and this is not just any country, it's a country that's helped us and we need to be sure that we don't treat them unfairly.

DOBBS: Far be it from me to want to treat anyone unfairly, but farther from me is the idea of treating the United States and our people unfairly. And what really overwhelms me here is that the State Department, the U.S. State Department, your colleague over there, Secretary Rice, has a traveler's advisory for Americans in the Emirates warning of terrorist concerns and threats. As do other -- our other partner nations.

PORTMAN: We're told the government's on our team. They're helping us fight terrorism. They were the first government in the Mideast to sign up for this Container Port Security Initiative we've established around the world. They were the first ones to sign up. So when a country in the Mideast steps up we want to fight terrorism with you, we want to be on this Container Security Initiative before anybody else, when they say we want to be your ally and help you in this, we do need to be careful.

DOBBS: Why do we need to be careful? Ambassador, I hear this, we need --

PORTMAN: We need friends. DOBBS: This is isn't a super power in the world. United Arab Emirates is 2.5 million people sitting over there in an area less than the state of Maine.

PORTMAN: It's a relatively small country. They actually like to trade with us, and that's good. But it's a relatively small country but they're one of our friends.

DOBBS: Absolutely, but why would we turn over control of the operation of terminals in six of our major ports because we want to be pals?

PORTMAN: We will never turn over control of security and we don't in this case. As you know, the Coast Guard provides the physical security.

DOBBS: That's not, I know that's -- there's some people trying to push that forward, but in point of fact, those terminals do have security requirements and many of those terminal operators are hiring security forces to carry out security at the terminals. I may not be the brightest fellow in the world, but I do understand the issues here.

PORTMAN: It's the job of Coast Guards and customs to that for us and we do a good job of it. Right now, there is a special security assurance letter, I understand, that the company gave the Department of Homeland Security to assure that they even went beyond that. Their job is not security. It's to operate the ports. A British company was doing it before this.

DOBBS: I've got the U.S. Trade Representative talking about security at our ports and the Secretary of Homeland Security talking about trade and we've got this system out as comprehensively approached as it could be, if not wrong-headedly on my part.

Let's turn to China. You recognize something that I found astonishing, frankly, for this administration. You recognize trade imbalances, over a $200 billion trade deficit with China and you want to do something about it. I have to congratulate you and take my hat off to you.

PORTMAN: Lou, let me be sure that you understand what we're talking about here. I do think China does not play by the rules and I think we need to be tougher. And what this report does, it's a thorough report, I've got a signed copy for you here because I know you enjoy going through it.

DOBBS: I've gone through it.

PORTMAN: It talks about the fact that now that China is in the WTO, now that they're a mature member of the World Trading Organization, we need to be sure they play by the rules. And it goes to a very specifically what our concerns are, intellectual property, violations of our intellectual property rights, our software, our movies, our music and so on.

DOBBS: They're stealing from us, is that another way to put it?

PORTMAN: That's another way to put it. Piracy. Second is with regard to the support they give to their industry which we think is unfair. Third, with regard to market access, generally. U.S. products ought to be able to get into China's market just as their products come into our market.

I want to be careful about one thing. The trade deficit is a function of a lot of different factors. Most economists well till you, right, left or center, Republican or Democrat, it's mostly the macroeconomic issues including our low savings rate, their high savings rate.

We have a zero savings rate among households and they have a 50 percent savings rate.

DOBBS: We have to talk about the fact that the savings rate is low because this country is borrowing so much capital to support our runaway imports which is an $800 billion lost opportunity for this country every year.

We talked so doggoned much about ports we're not going to have time to talk about how you're going to balance our trade relationship with China.

PORTMAN: It's very important to balance. It does needs to be equitable, durable, as you indicated, and fair and I don't believe it is now. This administration is going to increase our enforcement, both in terms of resources and real action. Next time you and I talk, we'll have a chance to go into that in detail.

DOBBS: Ambassador, just one quick question. When will we have a balanced trade relationship with China thanks to your efforts?

PORTMAN: The balance needs to come in terms of the policies and hopefully that will come in the next few years as we begin to get China as a full-fledged member of the WTO and we'll be sure they play by the rules and they're befitting from the World Trade system.

In terms of the deficit, my only point is the deficit is a function of a lot of different things. The key is we need to expand our exports, knock down barriers. We had a 20 percent increase in exports to China last year. We had need to do even better than that and that is what we try in our trade policy.

DOBBS: We're going to have to do a lot better than that, $200 billion deficit is accelerating, in point of fact, to $4.5 trillion external trade deficit since 1990. We've got to do a little scratching of our head and try to figure out what we're going to do.

PORTMAN: Our economy is strong and when you look in the last year when we had that trade deficit, we've gone to $5.2 to 4.7 percent unemployment, added two million jobs.

John in California. "Lou, while I have a great deal of respect for you and your show, there is at least one thing on which we don't agree. Many times you've commented that the American people are not as stupid as many in Washington think. I believe they are that stupid. How else can you explain our current elected officials in Congress and the fact that George Bush has been elected not once, but twice. I rest my case."

Surely there are other explanations, but I take your point.

And Kurt in Florida. "I'm appalled that the Bush administration would even consider allowing the ports to be operated by a foreign company in Dubai. Is there no end to this border security madness? I've written both of my senators but, oh wait, they're off this week."

Send us your thoughts at loudobbs.com. In our poll tonight 99% of you feel less confident because the president says he didn't know about the port deal until members of Congress objected after the deal was approved.

Thanks for being with us here tonight. Please join us tomorrow. Good night from New York. Thanks for watching. "THE SITUATION ROOM" begins right now with Wolf Blitzer -- Wolf.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com